Jenny leased a piece of property from Dennis. Dennis subsequently sold the property to Nina. What happens to Jenny’s rights to the property? The answer is that Nina will be bound by Jenny’s real lease rights only.
Under Thai law, if land or immovable real estate property is transferred during the lease term, the lease will not be terminated. Instead, the new owner will be entitled to the rights and will be subjected to the duties of the old owner. Section 569 of the Civil and Commercial Code provides as follows.
A contract of hire of immovable property is not extinguished by the transfer of the ownership of the property hired.
The transferee is entitled to the rights and is subject to the duties of the transferor towards the hirer.
Only real lease rights, however, will transfer and follow the freehold title of the land and will be binding upon the new owner. Real lease rights consist of the following rights:
- right to sublease,
- right to assign,
- payment of rent,
- lease term,
- termination,
- default clause,
- purpose of the lease, and
- responsibilities for defects.
Non-lease rights consist of other contractual promises between the original lessor and lessee. The following are examples of non-lease rights:
- option to renew the lease or register a new lease on or prior to the expiration of a 30-year lease,
- promise by the lessor to purchase the structure upon expiration of the lease, should the lease not be renewed,
- part repayment of rental with interest, should the lease not be renewed, and
- option to purchase the land should this become permissible under Thai law.
These contractual rights are not enforceable if ownership of the land is transferred and have effect between the original parties to the lease only.
No Comments, Be The First!